<font face="Verdana"></font id="Verdana">
Need some help on this topic.
Am currently on TN working in the US since one year starting from May 2004. I had bought a house in Ontario in October 2002 and used it as primary residence. After coming to US in May 2004, I rented-out our home starting August 2004. It was on rent for 10 months until May 2005.
Realizing headaches of being a landlord, I wanted to sell it and put it on the market for sale. There is also an offer on it now.
I am told that being non-resident of Canada there are withholding taxes on the property I am selling. Moreover, 25% of rent (or rental INCOME ...? ) of those 10 months will also be withheld.
Can someone please tell, what is the percetage of the withholding taxes on capital gain in this case... OR is this going to be a percentage on the selling price ? I don't anticipate the gain to be more than CDN $10K to 15K after paying off the closing costs, agent fees, etc.
Moreover is there a way to avoid this heavy withholding of taxes because being a non-resident. Can I go there in person to monitor the sale (be a temp. resident for a week or two ?) or give a close relative's address or transfer power of attorney to a Cdn resident ? or try to prove that I do intend to return back to Canada after some time ? [?]
any help please would be appreciated.
on TN in US, want to sell house in Ontario
Moderator: Mark T Serbinski CA CPA
The 25% Non-Resident tax on rent should have been withheld and submited to CRA EVERY month, not just when you sold. CRA will now bill you for the missing tax.
You have the option of making it 25% on net, but you must file a 216 return to get the difference back.
very little of your hosue gain is taxable in Canad since you sold it just after one year in US (had you sold it within the year none would be taxable.)
You will owe a couple of dollars of Cdn tax, but the point is that you must file a few forms BEFORE selling, otherwise HUGE tax is withheld (you would get it back at end of year).
Look at the non-resident section of CRA website for the various forms etc to fill out. They also explain how to calculate the taxable capital gains on a home that was sold after one became non-resident.
You may have some uS tax to pay as well on the sale, because this was for a breif time a renatl property.
<i>nelsona non grata... and non pro</i>
You have the option of making it 25% on net, but you must file a 216 return to get the difference back.
very little of your hosue gain is taxable in Canad since you sold it just after one year in US (had you sold it within the year none would be taxable.)
You will owe a couple of dollars of Cdn tax, but the point is that you must file a few forms BEFORE selling, otherwise HUGE tax is withheld (you would get it back at end of year).
Look at the non-resident section of CRA website for the various forms etc to fill out. They also explain how to calculate the taxable capital gains on a home that was sold after one became non-resident.
You may have some uS tax to pay as well on the sale, because this was for a breif time a renatl property.
<i>nelsona non grata... and non pro</i>
hi,
according to Revenue Canada, "<b>Canadians working down South in US temporarily (on TN) while maintaining residential ties with Canada, are treated as <u>FACTUAL residents</u> for ALL TAX purposes and taxed as if they are physically in Canada."</b>
So why should non-resident clause/tax ever apply in this case ?
according to Revenue Canada, "<b>Canadians working down South in US temporarily (on TN) while maintaining residential ties with Canada, are treated as <u>FACTUAL residents</u> for ALL TAX purposes and taxed as if they are physically in Canada."</b>
So why should non-resident clause/tax ever apply in this case ?
You did NOT maintain residential ties, because you rented out your house. <u>This is a good thing, not a punishment</u>.
You are always better off being a non-resident.
Your capital gains on your house, by using the formula of adding one year to your residency will yeild little if any capital gains tax.
If you correctly file all the non-resident complince forms before selling the house you will have literally pennies withheld in tax, trust me.
It is only if you fail to comply ahead of time with the reporting requirements that CRA has to assure itself that they will get any tax owing them by witholding far more than could possibly be taxed. You would get this back at end of year by finling a tax return, in any event.
The fact that you did not send them their rental tax money is the reason you will owe them anything. This was a mistake on your part, but one which is VERY CLEAR on any CRA non-resident publications.
Even this rental income tax could have been reduced had you taken proper steps, and you may still be able to if you act quickly. Look for '216' on CRA website, while you are looking for the correct non-resident property forms.
<i>nelsona non grata... and non pro</i>
You are always better off being a non-resident.
Your capital gains on your house, by using the formula of adding one year to your residency will yeild little if any capital gains tax.
If you correctly file all the non-resident complince forms before selling the house you will have literally pennies withheld in tax, trust me.
It is only if you fail to comply ahead of time with the reporting requirements that CRA has to assure itself that they will get any tax owing them by witholding far more than could possibly be taxed. You would get this back at end of year by finling a tax return, in any event.
The fact that you did not send them their rental tax money is the reason you will owe them anything. This was a mistake on your part, but one which is VERY CLEAR on any CRA non-resident publications.
Even this rental income tax could have been reduced had you taken proper steps, and you may still be able to if you act quickly. Look for '216' on CRA website, while you are looking for the correct non-resident property forms.
<i>nelsona non grata... and non pro</i>